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Self-employment scheme gets early launch

5 May 2020

HMRC is writing to self-employed workers this week to explain how to apply for the Self-Employment Income Support Scheme (SEISS).

The SEISS scheme will open for claims on Wednesday 13 May - earlier than originally scheduled. According to HM Revenue and Customs (HMRC), about three and a half million customers may be eligible for the scheme.

This temporary scheme will enable those eligible to claim a taxable grant worth 80% of their average trading profits up to a maximum of £7,500 (equivalent to three months' profits) in a single instalment.

The scheme will benefit self-employed individuals or those in a partnership whose businesses have been adversely affected by coronavirus. Payments will reach bank accounts by 25 May, or six working days after the claim is made.

HMRC is using information that customers have provided in their 2018-19 tax return - and returns for 2016-17 and 2017-18 where needed - to determine their eligibility and is contacting customers who may be eligible via email, SMS or letter. It has also opened an online checker which will allow customers to check their eligibility for themselves.

Customers are eligible if their business has been adversely affected by coronavirus, they traded in 2019-20, intend to continue trading and they:  

  • Earn at least half of their income through self-employment;   
  • Have trading profits of no more than £50,000 per year; and   
  • Traded in the tax year 2018 to 2019 and submitted their self-assessment tax return on or before 23 April 2020 for that year. 

Freelancer body IPSE has welcomed the news that self-employed people are being told early if they are eligible for government support. However, it has warned that many self-employed workers are not getting the support they need.

Andy Chamberlain, IPSE director of policy, said: "It is excellent news that the government will tell people early if they are eligible for the Self-Employment Income Support Scheme (SEISS). This is unexpected and welcome given just how complex it is to implement a new initiative on this scale.

"While many self-employed people will get a wave of relief from receiving these early notifications, it is vital we do not lose sight of the many others who are not getting the support they need. Limited company contractors, the newly self-employed and those who have earned just over £50,000 p/a have been left out in the cold and urgently need more financial support."

Andrew Jackson, head of corporate tax at Fiander Tovell and chair of the Tax Panel of the UK200Group, has expressed similar concerns. "I'm worried that the scheme is targeted very simply and arbitrarily, and excludes a lot of people who are effectively self-employed but don't meet the criteria, including many freelancers and gig-economy workers.

"Eligibility for the scheme seems to be based on whether HMRC already has the information it needs to do the calculations, rather than on whether people actually need the help. It would make a little more work for HMRC to include more people, but it would be much fairer for small businesses. Also, the fact that agents can't directly assist taxpayers in making the claims is a cause for concern: even if the system is relatively simple, many people will have difficulty navigating it."

Written by Rachel Miller

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